12 June 2005

Vonage, Inc

Vonage is a medium-sized company that offers online telephony. What is that? Basically, when you go online like I am now, you use the modem to call your ISP, who charges you for a local call (or less). Then the ISP's computer links to other servers that host web pages (like Google) or, through email, other computer users. Communication between servers is cheap—so cheap it makes no difference if you're visiting a website in Bangalore or in Spokane. Likewise, sending an email to someone in the RSA doesn't cost more than sending one to someone in Denver. Even if you live in Denver.

It may seem odd, but it's taken until about two years ago for it to become common for people to use the internet to make telephone calls over the internet. For years the idea was blocked by the long-distance telephone companies. Then, a firm called Vonage offered its own E911 service (a private 911 service) ; after this wedge market was in the door, Comcast and TimeWarner launched telephony services as well (Forbes). Vonage soon offered overall telephony everywhere, at reduced rates (the Register). I was awfully ashamed to have not heard of it, but it has sales of only $50 million and 600,000 subscribers—it's pretty new. Still, Vonage uses regular handsets, in contrast to Skype, which requires computers with internet access.